Debt

New Restraints On Debt Collectors To Aid Consumers

October 26, 2012 By Sherry Tingley

If you believe a debt collection company is not treating you right, who you gonna call?

As of Jan. 2, 2013, it should be the Consumer Financial Protection Bureau, a federal agency that is expanding its responsibilities to include oversight of debt collectors. Congress has authorized the agency to identify and prevent practices harmful to customers. Previously, the focus of CFPB was primarily on the financial strength of banks. Now, it will look beyond to non-bank companies. The intent of Congress is to provide a stronger tool to combat practices detrimental to those who use the services of these companies. Historically, debt collectors have not been subject to federal scrutiny. CFPB was created after the turn-of-the-century crises that had financial institutions in general in an uproar.

Many borrowers will look upon the added supervision as a good thing. Some debt collectors have used strong-arm tactics to get their due. Calls to the employers of debtors, filing of lawsuits against people who have small balances owing, credit-mangling reports to credit bureaus and other practices have sometimes left consumers feeling stymied. Some of the methods may violate federal disclosure rules, involve unfair fees or other practices not sanctioned by the government.

The new oversight authority will apply only to companies with more than $10 million in annual receipts — about 175 of which have been identified. These companies represent more than 60 percent of the industry’s annual receipts, agency representatives found. Where there are abuses, the agency can file civil charges or take other enforcement measures against those companies that violate consumer laws, even if the offending company is not part of the federal supervisory program.

Agency research shows that About 30 million Americans have, on average, $1,500 in debt that is handled by the debt-collection industry. This branch of the financial family joins mortgage companies, private student lenders and payday lenders who already are under the federal microscope. The 2010 remake of federal financial laws established the CFPB as part of a general move to get more accountability into the institutions that handle Americans’ money. Credit bureaus also preceded debt collectors in the move for oversight.

The new laws for debt collectors allow regulators to demand information even when there is no overt proof of wrong-doing. Supervisors can review marketing materials, phone scripts, consumer disclosures and other aspects of the businesses.

No one likes to be a debtor and no one likes to be pestered with nasty phone calls from creditors. To prevent getting yourself into these situations, make sure you stay on top of your cash flow management strategies.

For best practices concerning your cash flow follow these five steps.

1. Stop regarding your financial management with fear, anxiety, insecurity or some combination of the above. This will paralyze your cash management systems. Create a system that works for you so that you don’t experience these crippling emotions.

2. Cash-flow management is a critical element in every home. When it’s done poorly or not at all, you may find yourself short of cash when it’s time to pay your bills and other crucial expenses. This leads to the use of credit cards and adds to your debt.

3. Keep up with your changing financial needs. Every stage of life will require different types of budgeting and planning. Be flexible and yet keep your long term financial goals in mind. Charles Darwin reminds us that “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

4. Avoid spending money you don’t have. Betting on future income is never a good idea. This will only dig you deeper into a financial hole.

5. If you are in debt now, then set the date you will be debt free. Remember Napolean Hill’s words: “Whatever the mind of man can conceive and believe, it can achieve.”

Tips to Identify Debt Settlement Scam

March 12, 2012 By Guest

Like many other individuals, if you are drowning under the sea of outstanding debt and looking for a way to come out of it, it is advisable to enroll into a debt relief program, like debt consolidation and debt settlement. When you enroll into a debt consolidation program, a consolidation company negotiates with your creditors to reduce the interest rate on each debt. On the other hand, when you enroll into a debt settlement program, a settlement firm negotiates with creditors to reduce the pay-off amount. However, no matter whichever program you choose, you must be aware of the debt settlement scams. There are many companies who charge high front fees making alluring promises to settle the debt by up to 50 to 70 percent, but ultimately do nothing. To avoid such situation, you must be careful while hiring a settlement or consolidation company.

Let us here discuss how to identify a debt settlement fraud.

If a settlement company calls you too many times and asks you for services, ask for their contact information. If the company does not want to disclose its name and address, and insists you to enroll into their program, then you must understand it is a fraud. Legitimate companies will never contact you over phone and beg you to hire their services.

If you are thinking to hire the services of a debt settlement company, contact the Better Business Bureau to check its credential. The Better Business Bureau can tell you if there has been any complaint against the company you are considering. To know more about the company, you can also approach your state attorney general’s office that can provide with information about the reputation and experience of the firm.

Before signing up for a settlement company, ensure whether or not the company is a member of the Association of Settlement Companies. This association is a trade group that promotes good industry practices. If the company claims to be a member of the association, check the association’s website to ensure its membership.

Ask the company about the effects of debt settlement on credit ratings. If the company is legitimate, it will be honest about the fact that debt settlement affects the credit rating negatively. But if the company is questionable, it will assure you that no negative effect will occur.

Before you start working with a company, make sure you get everything in writing. Fraudulent firms will never put their terms in writing in a legally binding document, and will ask for hefty fees for services. Fraudulent companies will never cooperate with you and entertain your doubts and queries; they will only hurry you for signing on the paper work and enroll in their program.

In conclusion, consider the above mentioned tips in order identify fraudulent debt settlement companies.

Managing Debt

February 6, 2012 By Guest

How proper budgeting can help you contain debts?

Keeping a proper budget is very important in personal finance. It can help you prosper financially and achieve financial goals. Importantly, through maintaining a proper budget, you can get relief from debt. Here we discuss about some budgeting tips, by following these tips you can reach your financial goals.

Use credit cards wisely

One of the prime causes of personal debt woes is of course the unwise and imprudent use of credit cards. It is a very common trend in the country that many of you take out multiple credit cards and use those cards recklessly. Inadvertently, this often results into debt woes. In order to avoid this, it is recommended that you must use credit cards wisely and with discretion. However, this is not to say that you avoid using credit cards completely. Rather, it is recommended that while using credit cards, you must be very rational.

Put in place an emergency fund

Another important budgeting tip would be to build up an emergency fund so as to meet any unintended contingency. Various emergency cases may occur at any time and these can result into huge monetary loss. Natural disasters or sudden emergency cases may result into huge financial loss. If you have an emergency fund in place, you can contain all these unintended contingencies. In order to build up an emergency fund, you need to save something on a regular basis.

Examine your expenses

Another important budgeting tip would be to analyze your expenses. First of all, you need to carefully examine the expenses that you make. You need to see your items of expenses and see how much you spend on each of these items. This will help you identify the items on which you are spending more than actually required. The next step would be to prepare a realistic budget or to allocate money on each of these items. Thereafter, you need to ensure that you do not spend beyond your limits. You need to do this on a regular basis. This will help you a lot to save a lot of money.

Curb instinctive purchases

One common thing that often creates a big hole in your pocket is your impulsive purchases. Sometimes, it is seen that, you can’t control yourself and engage in tempting purchases. In order to contain this habit, it is recommended that before visiting a shopping mall, you must decide what you will purchase and the approximate amount that you will spend. You need to stick to your decision. This will in turn help you save a lot of money.

Higher Education One Of Victims of Bad Economy

January 10, 2012 By Twila Van Leer

It has long been apparent that higher education has a direct correlation with what a person can expect to earn during his or her lifetime. But there is growing concern that the high cost of higher education may be nudging some young people out of the matrix. With the amount of their tuition checks constantly rising, the number of students borrowing to pay their college costs has doubled in the past decade, the College Board reports. The average cost of one-year tuition at a public four-year college is now $20,000, and at private non-profit schools, the average jumps to $35,000. Those numbers are lending themselves to a groundswell of discontent among young students who say they are being priced out of the prospects for the higher education they need to compete in today’s world.

One group of students recently expressed their concerns in a demonstration at New York University’s Washington Square. The group characterized themselves as “Casualties of Debt.” and their objective was to foster more understanding of their situation. Among the figures they tossed up for review: The amount of outstanding student loans in America surpassed credit card debt for the first time in August 2012. The indebtedness inevitably eats into the prospects of the better earning power they are trying to build, they complained. NYU, incidentally, leads the nation in student debt at $659 million and growing.

College tuition continued to rise even when other industries were cutting prices to accommodate a sluggish economy. During the 2008-09 school year, in-state tuition at public schools rose by 6.4 percent, while out-of-state tuition jumped by 5.2 percent. At private four-year universities the increase was 5.9 percent. College graduates are leaving school with major debt and, at this point in time, at least, moving into a depressed job market plagued by high unemployment, making the promise of increased earning power just empty promises for many of the graduates.

The New York demonstration, which was supported by MTV personality and filmmaker Andrew Jenks, may have had minimal impact, but it is an indicator of unrest among students and among those who would like to be students, but whose current personal finances don’t allow them to pursue the education that they are convinced would enhance their future earning power.

Depression Caused by Debt

December 27, 2011 By Guest

Many experts say that getting depressed over mounting debt is normal. For many individuals just the thought of not being able to overcome their debt can trigger major psychological problems. Generally, the depression is just a phase, as the debt loan lightens, so does the depression. However, for others, the depression can lead them down a dark and tragic road, ending in suicide or thoughts of suicide.

It is critical for anyone that has had thoughts of hurting themselves or others to seek out the care of a doctor or mental health care professional. They will be able to offer a proper diagnosis and help develop a care treatment plan. In conjunction with a doctor’s care, it is also important to get to the root of the problem. If the root of your depression is seemingly insurmountable debt, a debt relief counselor can help assess your situation.

A debt counselor can offer just as much help in lifting depression as a doctor or psychologist can if debt is your main source of stress. They will take note of your financial crisis, develop a plan of action to start managing your debt and a budget that will help you avoid new debt and financial pitfalls in the future.

Financial stress can, at times, feel unbearable. Whether you are stuck in a cycle of late payments, growing credit card debt or you unexpectedly lose a source of income, it can negatively impact all aspects of your life. This allows depression to take hold as you feel a distinct lack of control over your situation.

The brain does not always think logically during a depressive phase and debt that can be successfully managed looks like a never ending battle. Some people feel they cannot face a battle that seems like it offers no way out. That is why it is so critical to seek outside help if you or someone you love exhibit any signs or symptoms of depression.

Seeing outside help through a debt relief counselor is one of the best things you can do for yourself. Many times, just the act of asking for help can make you feel more in control of your situation and lighten the dark cloud hanging over you. A debt counselor can help you determine the best course of action to begin paying down your debt and recognize any areas that you may be able to save money in order to maintain you living within your means.

Being in debt can feel like a heavy burden around your neck, but there is help out there and often it is just a phone call away. You do not have to wait to hit rock bottom before seeking help. Debt should not be a source of depression or anxiety, but an opportunity to better your situation by taking control over your finances once and for all.

You can tackle your personal finances by first recognizing that it is a problem beyond your means and acknowledging you need help. Climbing out from under deep debt is not easy and it does take commitment and some sacrifice, but you will be better off accepting that and deciding you are willing to fight rather than give up because of money problems. There are solutions out there that will work for you.

Guest post by Suzan Bekiroglu